Today's edition of the Saxo Morning Call features the SaxoStrats team discussing the continuing weakness of the US dollar as commodity prices recover ground and in the wake of key US equity indices hitting all-time highs Thursday.
Medium term
Trade view / 25 March 2015 at 2:53 GMT

Cocoa cravings sated until late 2015

Managing Partner / Spotlight Group
United Kingdom
Instrument: CCK5
Price target:
Market price:

Cocoa demand is to remain depressed as a rebound in consumption will not kick in until late in 2015.

The urgent requirement for processors to buy beans is being depressed by the extent of inventories accumulated up last year, prompted by a series of plant openings, and by concerns of the Ebola outbreak interrupting supplies.

Cocoa grinding, which represents demand from producers for raw beans, was seen to have dropped globally in the October-to-December period of 2014 and the International Cocoa Organisation (ICCO) reported on March 4 that the level of grindings in 2015 would fall by 1.7%.

Prices for the main ingredient in chocolate have fallen 8.07% this month as investors considered the news that Ivory Coast, the world’s top cocoa grower, would deliver a bumper crop.The nation produced a record 1.7 million tonnes of cocoa in the year ended September, according to the ICCO in London. Market watchers say Ivory Coast cocoa output is on track to deliver a good mid-crop coming on, which should keep selling pressure on at a time when the world is consuming less chocolate.

Global demand, measured by the amount of cocoa processed, will decline this year in every region except Africa, the ICCO said. Demand in Europe, the biggest chocolate-consuming region, and the Americas are expected to fall 2% each, while consumption in Asia, once seen as the region with the most growth potential, could fall 4%, according to the ICCO’s forecasts.

Management and risk description


Entry: sell at 2772.50

Targets: 2659…2615…2588…2495

Stop: 2950

Time horizon: medium-term

— Edited by Susan McDonald

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Non-independent investment research disclaimer applies. Read more
naresh naresh
Dear steve
i had buy GSR ratio and its going down i hv buy at 73.50.
Now it is around 70.25.
So whts ut view on GSR trade for short term.
thanxs hv a gud day.
Stephen Pope Stephen Pope
Hi Naresh,

I am sorry for my late reply. I have been busy most of today on an economics panel.

As for the GSR...well my last venture ended up looking rather ugly but the tight stop was helpful.

Right now I see weakness with 70.22 and even 68.39 in play. Will probably look at this again tomorrow morning. Now looks like any push higher is just a day retracement unless we break above 74.80 to 75.00


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